What's it all about, Alfie?

I usually don't spend a lot of time talking about the industry that is the source of my livelihood, but this story is just too good to pass up. Seems that some brilliant trader decided to hedge his positions with exceptionally bad positions. So bad, in fact, that these hedges - not the original positions, but the hedges, have cost the bank $2 billion, and it's estimated that it might cost them another billion before it's all said and done.

What's even more amazing is that JP Morgan has the cash to take the loss and not post a loss for the quarter. Amazing. First, that they believed the hedges were, in fact, hedges, and that they had more than $2 billion to waste.

If they were, indeed hedges, then they were designed to cancel the loss of the original positions. This means that if the hedges lost value, then it should have been the case that the original positions gained value. So they must have picked the most horrific hedging instruments and then held far too much of them to loose that kind of money.

Really. That's almost impressive.

This morning Boing Boing had a link to this wonderful explanation of the creepiest aspects of the SOPA/PIPA legislation that's working it's way through the House and Senate. As with the other Khan Academy videos I've seen, it's excellent - what's new is only the subject matter. And in this case, the essential points of this very bad legislation.

What amazes me is not that this was written - government is pushed by money, that's a given. No, it's that they made it like so much other legislation with regards to illegal activity - an accomplice is as guilty as the perpetrator. But in the world of computers, you can easily force an accomplice without their knowledge - posting to a blog, posting in general.

That's the thing that I think the law hasn't caught up to: The ability for someone to implicate another so easily. It's got to be understood that there's a difference between supporting the activity, and supporting the mechanism of the support (posting). But I have no belief that they'll get this right in the next 20 years. It's just not their technology.

So I'm sad to say that I'll live in a time when the law makers are hopelessly out of date with the technology I make a living from. Sad.